European Union Initiative: from Consultation to Legislation? Chair: Gerard McDermott QC , Outer Temple Chambers Speaker

European Union Initiative: from Consultation to Legislation? Chair: Gerard McDermott QC, Outer Temple Chambers Speaker: KatjaLenzing, European Commission

Green Shoots for 2011 in Member States Chair: Gerard McDermott QC, Outer Temple Chambers Speakers: Netherlands:Stijn Franken, Nauta Dutilh Italy: Massimo Todisco, Mogelli, Todisco & Carpentieri (CODACONS) Scotland: Charles Livingstone, Brodies LLP

Dutch approach BIICL, 27 June 2011 Stijn.franken@nautadutilh.com

Act on Collective Settlement of Mass Claims (2005) • Collective settlement • Court certification (Amsterdam court) • Opt out system (3 – 6 months)

All areas • DES (2006): product liability EUR 38 mln, 20.000 • Dexia (2007): financial products 300.000 • Vie d’Or (2009): professional liability EUR 45 mln, 11.000

All areas • Shell (2009): shareholders USD 340 mln, 500.000 • Vedior (2009): shareholders EUR 4,25 mln, 2.000 • Converium (2010): shareholders 12.000

Foreign parties? • Shell (2009): • US settlement (2008) • Amsterdam settlement (2009) • Amsterdam settlement: majority of the class members outside the Netherlands • Art. 2 and art. 6 EU Regulation (44/2001)

Foreign parties? • Converium (2010): • US settlement (2008) • Amsterdam settlement (2010) • Amsterdam settlement: • Swiss company • only 2% of the class members in the Netherlands • ‘preliminary judgment’

Foreign parties? • Proper notification • Adequate representation

Foreign parties? • Proper notification: security cases: • Registered mail/ EU Service Regulation (1348/2000) • Advertisements/ internet

Foreign parties? • Adequate representation: security cases: • Explicit endorsements by foreign institutions and foreign shareholder associations

Foreign parties? • US developments • US settlements in stead of world wide settlements: • Shell: 2007 • Converium: 2008 • US Supreme Court: • Morrison v. National Australia Bank (2010) • Hoffmann-La Roche v. Empagran (2004)

New Act: curse of blessing? • Initiated by the pharmaceutical industry • Simple and quick • Contribution to EU alternative for US style class actions?

Italian class action

Consumers’ code clause 140 bis • Class action can be filed since 1 january 2010 • Only for torts committed after 15 august 2009

Who may file • Consumers as defined by consumers’ code clause 3 (a physical subject who doesn’t act for professional aim)

Types of claims that can be brought • Contractual rights (identical position) • Given product liability (identical rights) • Unlawful business procedures and anticompetitive behaviours (identical rights)

Attemptable pronouncementes • The court can condemn the defendant to redress or restitution • The court can specify an uniformly applicable criterion to calculate each individual redress • No punitive damage

Main differences between north american and italian class action • The american court checks every transaction • The italian court doesn’t have the power to check the transactions

Main differences between north american and italian class action • North america: opt out mechanism, punitive damages • Italia: opt in mechanism, no punitive damages

Court of Turin 27/05/10 • The lead plaintiff sued Intesa Sanpaolo Bank claiming nullity of clauses containing charges for line of credit, named “overdraft commission fee” • The defendant claimed that the actor could not be considered a consumer • The bank claimed also that class action could only filed to claim redress or restitution

Court of Turin 27/05/10 • The court stated that the status of “consumer” is applicable whenever a professional use of the good or service is marginal • The court stated that the actor had not the right to sue, only claiming the nullity of a clause, unless he is not damaged by the bank’s conduct • The court stated inadmissibility of class action

Court of Appeal of Turin 15/10/10 • Class action is admissible only to claim pronouncements of redress or restitution

Court of Turin 28/04/11 • Is not admissible the simultaneous and direct presence of the consumers and of the consumers’ association in the trial • Excluded consumers’ association from the trial • Stated inadmissibility of the class action, because the lead plaintiffs were judged not eligible to act in the interest of the class

Court of Turin 28/04/11 • The Court assumed consumers association would be always able to “properly act in the interests of the class”

Court of Milan 20/12/10 • Ego Test Flu, marketed in Italy by Voden Medical, is a diagnosis test (to be performed at home) whose efficacy was in doubt • It was promoted with a 99% safety profile test • Even the Board of health had thrown some doubts on Ego Test Flu efficacy

Court of Milan 20/12/10 • The actor issued the class action against Voden claiming the rendering of the cost paid for the product

Court of Milan 20/12/10 • Does the actor have the power to modify the request advanced according to clause 140 bis? • Judges in Milan reached a positive end on that point

Court of Milan 20/12/10 • At what step of the trial this right can be exercised by the parties? • The court established that the right to define and modify the request must be exercised within the first hearing, before the evaluation of admissibility

Court of Milan 20/12/10 • Is the plaintiff a consumer? • If the defendant claims that the plaintiff is not a consumer, he has to prove it (usually proving that the invoice was in the name of a person with a VAT number)

In a reformist perspective • Parliament should improve the law providing punitive damages, removing reference to service charters and reversing the path to join in from opt in to opt out

Collective Redress in ScotlandThe Gill Report Charles Livingstone Associate Brodies LLP charles.livingstone@brodies.com +44 (0)131 228 3777

Collective Redress in European Private International Law Chair: Alexander Layton QC, 20 Essex Street Speaker: Professor Astrid Stadler, University of Konstanz Discussant: Professor Linda Silberman, NYU

Collective Redress in European Private International Law Prof. Dr. Astrid Stadler University of Konstanz, Germany

Outline I. Situation of mass litigation in Europe today 1. Reform of collective redress mechanisms in EU Member States 2. EU Commission‘s Consultation Paper „Towards a Coherent European Approach to Collective Redress“ II. Procedural problems arising out of cross border mass litigation 1. International jurisdiction under the Brussels I Regulation 2. Recognition and enforcement [3. Conflict of laws] III. Revision of the Brussels I Regulation 1. Abolition of exequatur proceedings 2. Exception: Art. 37 Commission Proposal

Cross border mass litigation I. Situation of mass litigation in Europe today • Existing mechanisms to compensate a group of victims harmed by an accident, defective products or illegal business practices vary widely within EU • group actions (opt-in & opt-out) • representative actions by Ombudsmen, consumer organisations or other private associations • test case proceedings • representative actions for skimming-off illegally gained profits • Dutch WCAM: court proceedings to declare out-of-court settlement in mass disasters binding for all victims [DES, Dexia, Shell, Converium] • EU initiatives • DG Competition: White Paper on damages actions for breach of EC antitrust rules (2008) • DG Sanco: Green Paper on consumer collective redress (2008) • Feb. 2011: consultation paper „Towards a Coherent European Approach to Collective Redress“

International jurisdiction II. Procedural problems arising out of cross border mass litigation 1. International jurisdiction • collective redress cases: consumer contracts, insurance contracts, illegal business practices, product liability cases, capital market/securities cases • cross-border effects • no significant number of cross border cases before courts • difficulties of cross border organisation/information • representative organisations tend to act only on behalf of domestic consumers • forum under Brussels I Regulation ? • exception: Dutch WCAM cases • mechanisms of collective redress not available in all MS => need for forum shopping 2. Brussels I Regulation • group actions/representative actions: court must have jurisdiction over all individual claims (including absent plaintiffs) • basic rule: Art. 2 (defendant‘s domicile) => forum may not offer instruments of collective redress

International jurisdiction • special rules on international jurisdiction • Art. 5 no. 1: contract cases => place of performance • Art. 5 no. 3: tort cases => „place where the harmful event occurred“ = place where defendant comitted tort or place where claimant suffered injury • Art. 15, 16: consumer contracts => if consumer(s) sue: place where defendant or consumer is domiciled • Art. 6: ancillary jurisdiction for closely connected claims => refers only to a plurality of defendants not plaintiffs => pooling of claims only in Art. 2 forum: domicile of defendant => collective redress avaiable? => We need a new jurisdictional concept for mass litigation! • special rule on jurisdiction with respect to mass litigation – criteria? • forum must be predictable for the parties • privileges of Art. 5 no. 3, Art. 15 and 16 to be maintained? • What is the justification of the procedural privilege? • Litigation before foreign courts is bothersome for consumers/tort victims: foreign lawyers, burden of travelling, language problems …. • however: privilege is not necessary for absent plaintiffs in mass litigation being represented by group plaintiff or representative organisation => absent plaintiffs benefit from collective redress => they can be expected to accept a forum different from that avaiable in individual proceedings

International jurisdiction & recognition • forum for mass litigation: courts of the MS where a majority of victims is domiciled • no disadvantage for the defendant • place with the most significant relationship to the case => new forum optional in addition to Art. 2 and Art. 5 no. 3 (place where tort has been comitted) 3. Recognition and enforcement – the present system • Recognition of res judicata effect of mass litigation important • no parallel or subsequent mass proceedings in other MS • absent plaintiffs precluded from bringing individual proceedings in other MS (important in case of proceedings based on opt-out) • Recognition/enforcement of settlements • settlement very likely in collective redress litigation • court approved settlements (Art. 58 Brussels I Regulation) => public policy objection only

Recognition & enforcement • Grounds for non-recognition of judgments (Art. 34, 35 Brussels I Regulation) • public policy exception most likely to be raised in some MS against opt-out proceedings • constitutional concern (right to be heard, fair trial with respect to absent plaintiffs) • proper notification of absent plaintiffs/group members? • is „opt-out“ at least acceptable for trivial damages (Denmark, Norway group actions) ? • Back door: European Enforcement Order Regulation (EEO) applicable for settlements in mass litigation and WCAM cases? • Art. 3 (1) (a) EEO: „settlement which has been approved by a court or concluded before a court…“ • ratio legis: settlement (contract) in two party cases with explicit consent of parties; applicable to settlements for absent plaintiffs? • Conclusion • no European wide public policy standards, no case law on opt-out mechanism • major problems arise as soon as parallel mass proceedings in different MS become likely => special rules for recognition & enforcement necessary => agreement upon basic concepts of collective redress in Europe !?

Cross border mass litigation: choice-of-law rules 4. Conflict of laws • cross border group actions include absent plaintiffs from different MS • Rom I and II Regulations: multiplictiy of substantive laws to be applied to the claims of absent plaintiffs • new conflict rules necessary? • options: lex fori – law of the defendant‘s domicile – law of the MS where majority of victims is domiciled => choice-of-law rules should change the claimants position under substantive law for reason of procedural efficiency => formation of sub-classes in mass litigation => choice-of-law agreement between defendant and group plaintiff?

Revision of Brussels I Regulation III. Revision of the Brussels I Regulation (Comm. Proposal Dec. 2010) 1. Abolition of exequatur proceedings • Commission‘s main objective: no exequatur poceedings in MS of enforcement • exequatur proceedings: time-consuming & expensive • however: complete abolition of grounds for non-recognition not acceptable • suggested compromise: • review of violations of right to fair trial (in MS of enforcement, Art. 44 Comm. Proposal) • default judgements (service of documents? review in MS of origin, Art. 45 Comm. Proposal) • judgment irreconcilable with other (earlier) judgments? (review by enforcement authorities in MS of enforcement, Art. 43 Comm. Proposal) => objection to be raised only against enforcement not against recognition! Rationale behind the Commission Proposal: • no fundamental differences in substantive law of MS • mutual trust and confidence in equivalence of judicial systems of MS (political wishful thinking, not reality!)

Revision of Brussels I Regulation 2. Exception to the new concept: Art. 37 Commission Proposal • exisiting concepts and mechanisms of collective redress vary considerably • Commission: „required level of trust cannot be presumed at this stage“ • even partial abolition of grounds for non-recognition not acceptable • different standards of (procedural and substantive) public policy: legal standing of representative organisations, opt-in/opt-out mechanism => no review of proper notification or representation of absent plaintiffs Art. 37: Abolition of exequatur proceedings does not apply to judgments given in another MS „(b) in proceedings which concern the compensation of harm caused by unlawful business practices to a multitude of injured parties and which are brought by i. a state body ii. a non-profit making organisation whose main purpose and activity is to represent and defend the interests of groups of natural or legal persons, other than by, on a commercial basis, providing them with legal advice or representing them in court, or iii. a group of more than twelve claimants. • Definition of collective redress? • „compensation of harm“ = actions for the recovery of damages only? • „unlawful business practices“ ? • „a group“ (iii.): applicable to joinder of parties or only to „group/class actions“ with a group plaintiff? • number of absent plaintiffs?

Revision of Brussels I Regulation • What are the consequences of the Art. 37 (3) exception? • exequatur proceedings still necessary, grounds for non-recognition available with the exception of Art. 35 Brussels I Regulation => international jurisdiction highly controversial issue in mass litigation • Is the Art. 37 (3) exception necessary? • collective redress: recognition of res judicata effect is more important than enforcement => exequatur is of minor importance in practice • MS must have the chance to object to recognition of collective redress judgments/settlements • grounds for non-recognition could be maintained without exequatur proceedings => legal remedy of the defendant or an absent plaintiff in MS of enforcement => proper definition of collective redress exception necessary • Conclusion: • strictly no aboliton of exequatur proceedings • standards for the handling of public policy objections in collective redress cases necessary

Collective Redress in European Private International Law Chair: Alexander Layton QC, 20 Essex Street Speaker: Professor Astrid Stadler, University of Konstanz Discussant: Professor Linda Silberman, NYU

Comments on Practical Aspects of Bringing and Defending a Collective Claim - Finding the Right Court, Evidence and Funding Chair: Michael Patchett Joyce, Outer Temple Chambers Speakers: Rob Murray, Crowell & Moring LLPDavid Burstyner, OmnibridgewayBert Foer, American Antitrust Institute

European Union Initiative: from Consultation to Legislation? Chair: Gerard McDermott QC , Outer Temple Chambers Speaker